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The external costs of electricity generation

An external cost, also known as an externality, arises when the social or economic activities of one group of persons have an impact on another group and when that impact is not fully accounted, or compensated for, by the first group.

External Costs, ExternE, 2003 [1]

The ExternE project considered seven types of damage in its valuation of external costs:

The external costs were calculated using an “impact pathway assessment”:

Impact pathway assessment is a bottom-up-approach in which environmental benefits and costs are estimated by following the pathway from source emissions via quality changes of air, soil and water to physical impacts, before being expressed in monetary benefits and costs.

External Costs, ExternE, 2003 [1]

ExternE certainly doesn’t claim to be the last word on external costs of energy, but it is among the most detailed and comprehensive analyses to date.

The results for electricity generation are summarised in the ExternE brochure “External Costs” [1], and more detail is available in the “National Implementation” document [2].

Fifteen countries and nine electricity generating technologies were studied. Table 1 has the summarised results for the external costs by country and by electricity technology. The external costs are expressed in euro cents per kilowatt-hour of electricity generated.

Table 1. External costs of electricity generation

Country

Coal &

lignite

Peat

Oil

Gas

Nuclear

Biomass

Hydro

PV

Wind

€ cent per kWhe(a)

Austria

–

–

–

1–3

–

2–3

0.1

–

–

Belgium

4–15

–

–

1–2

0.5

–

–

–

–

Denmark

4–7

–

–

2–3

–

1

–

–

0.1

Finland

2–4

2–5

–

–

–

1

–

–

–

France

7–10

–

8–11

2–4

0.3

1

1

–

–

Germany

3–6

–

5–8

1–2

0.2

3

–

0.6

0.05

Greece

5–8

–

3–5

1

–

0–0.8

1

–

0.25

Ireland

6–8

3–4

–

–

–

–

–

–

–

Italy

–

–

3–6

2–3

–

–

0.3

–

–

Netherlands

3–4

–

–

1–2

0.7

0.5

–

–

–

Norway

–

–

–

1–2

–

0.2

0.2

–

0–0.25

Portugal

4–7

–

–

1–2

–

1–2

0.03

–

–

Spain

5–8

–

–

1–2

–

3–5 (b)

–

–

0.2

Sweden

2–4

–

–

–

–

0.3

0–0.7

–

–

U.K.

4–7

–

3–5

1–2

0.25

1

–

–

0.15

Data are from ref. [1].

The countries listed are the EU15 except Luxembourg, with Norway also included.

What do the numbers show? There’s a significant spread in the country-to-country figures, but overall coal and oil have the highest external costs, and wind has the lowest external costs. Nuclear and solar PV have roughly similar external costs, with nuclear slightly lower, and both are lower than biomass and gas. The hydro figures have a thirty-fold spread between the highest and lowest values, reflecting the very site-specific nature of the impacts from hydropower.